1/12/2013

After years of red ink, Gov. Jerry Brown said on Thursday that California’s $96.7-billion general fund is now poised to end next year with a surplus, thanks to years of deep budget cuts and billions in new taxes approved by voters last year.

“We achieved the position we’re in because of tough cuts … and then the people voted for taxes,” he said. “We broke the logjam by going to the people.”

Schools will be the big winner in the governor’s new spending plan, receiving $56.2 billion in state funds, an increase by $2.7 billion over the last year. That funding is set to jump to more than $66 billion by 2016.

The budget also dedicated an additional $350 million to the state’s public insurance program, Medi-Cal, to help implement President Obama’s healthcare law.

Brown’s budget predicts only the second budget surplus in the last decade, with an $851-million surplus projected at the end of the 2013-14 fiscal year — if all his proposals are approved by lawmakers.

Also, I hear to tell that California is poised to be THE leader in reinforced umbrella production.

They estimate that, since the budget will be balanced about the same time that pigs fly, the people will need protection from the aerial porcine droppings, and the surplus will come from the massive influx of revenues on umbrellas.

I hear he even has a plan in place to wipe out the surplus the following year by offering free umbrellas to the poor, that is, essentially anyone making under $1,000,000 a year, as per current liberal standards.

Credit rating agencies said last Feb. Cali appeared to be mending its ways and might be revised upward:

“The last time the rating agency gave California a positive outlook was June 2007, when it had an A-plus rating. It now has a rating of A-minus. California’s outlook improved from negative to stable last July after the last budget was passed.

Revenues, however, remain a concern. Last week, the state controller’s office released its latest monthly report showing tax collections came in $528 million below the January projections in the governor’s proposed budget.”

Brown’s budget predicts only the second budget surplus in the last decade, with an $851-million surplus projected at the end of the 2013-14 fiscal year — if all his proposals are approved by lawmakers.

Let’s see here, predicts, projected, and if. Sounds like wishful thinking to me.

The Wall Street Journal’s Political Diary reported last Friday that because of Proposition 30 (which increased the sales tax and top income tax rates) and Proposition 39, requiring corporations to pay taxes based on their sales in the state, there will be around $8 billion to $11 billion extra going to Sacramentoi each year ($2 billion of that from Prop. 39)

Now the state of California has borroiwed $25 billion over the past decade from special funds, schools, and local governments; $10 billion from the feds for unemployment benefits; and $73 billion from capital markets for infrastructure improvements.

But local governments want billions in reparations to redevelopment agencies, which the governor looted to balance his budget a couple of years ago.

The California State Teachers’ Retirement System has requested a $3.5 billion annual infusion to keep the teachers’ pension fund solvent. State universities and colleges are clamoring for an additional $600 million. Labor unions aim to renegotiate their relatively austere contracts, and Democrats plan to stuff their budget with sundry provisions such as middle-class college scholarships and dental benefits for low-income individuals.

Meanwhile, Medicaid providers have sued the state for slashing their payments by 20% in the last four years and will want to be re-compensated now that the state has cash to spare (at least in theory) and a Democratic supermajority. The budget proposes $670 million in taxes and fees on hospitals and Medicaid managed-care plans to help fund the ObamaCare Medicaid expansion, which will cost an estimated $350 million this year and grow over time.

Note, though, that $350 million is merely a “placeholder for the costs” until a more “refined estimate can be developed” once Washington provides more guidance on rules.

How about an initiative requiring budgeting and state financial reports to follow GAAP,

A low information voter might endorse that. GAAP isn’t really any good, it’s quite artificial in places, and governments have a different set of accepted accounting principles than corporations.

As long as it’s only reports, it can’t do any harm, but it might not be useful. Maybe something allowing or requiring five different ways f reporting things, in the hopes that one of those ways will be good?

and applying Sarbanes-Oxley rules and penalties to all public accounting within the state?

Everyone knows Sarbanes Oxley is no good, but it’s really bad for smaller corporations, because things matter according to how great a percentage of revenue or expenditures they are.

No – have an unlimited number (anyone who meets certain conditions can apply) of groups doing financial reports. They’d get access to data. Perhaps for a fee.

Meanwhile, the liberal business columnist in today’s LA Times has an article in which he warns that the US risks becoming another Argentina. But he places the onus of blame — not on spendthrift liberals/Democrats — but on Republicans, for their toying with the idea of refusing to raise the debt ceiling, thereby causing the US to become a deadbeat nation. Or a country chased by debt collectors in a way similar to what’s happening to Argentina right now.

But that’s okay. Because the US (in the era of Obamaville) and Argentina are both run by so many compassionate, wonderful, tolerant, big-hearted, generous, populist, honest, reliable, non-racist, non-bigoted politicians and the voters who put them into office.